TMI Blog2018 (3) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... 11(1)(a) - Decided in favour of assessee - I.T.A. No. 1405/AHD/2016 - - - Dated:- 27-2-2018 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER For The Appellant : Shri Mudit Nagpal, Sr.D.R. For The Respondent : Shri Himanshu Shah, A.R. ORDER PER MAHAVIR PRASAD, JUDICIAL MEMBER : This is an appeal by the assessee against the order of the Commissioner of Income Tax (Appeals)-9, Ahmedabad, vide Appeal No.CIT(A)9/637/ITO(Ex.)/14-15 dated 17/03/2016 for the Assessment Year (AY) 2009-10. 2. Sole grievance of the revenue is whether on the facts and in the circumstances of the case the ld. CIT(A) is justified in allowing the assessee s appeal and deleting the addition of ₹ 3,52,47,500/- in respect of disallowance of depreciation. 3. Briefly stated facts as culled out from the records are that the trust is engaged in educational activities. In the year under consideration, trust has claimed depreciation amounting to ₹ 3,52,47,500/- and carried forward loss of ₹ 4,29,74,728/-. Thereafter, ld. AO issued a show-cause notice to the assessee that why claim of deprecation and carried forward losses should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in holding that having regard to the scheme of the Act, 'income' referred to in section 11(1)(a) was not to be computed not in accordance with the provisions of the Act but in accordance with the normal rules of the accountancy under which the depreciation has to be allowed while computing such income under section 11(1)(a). 7. Ld. AR cited an order of co-ordinate bench in Assessee s own case in ITA No.1627/Ahd/2015 for assessment year 2011-12, similar claim was allowed by the Co-ordinate Bench with the following para and same is reproduced as hereunder: 4. Learned Departmental Representative strongly argues in favour of the impugned disallowance. His case is that the Assessing Officer had rightly held assessee's claim to be an instance of double deductions. We sought to know about the finality of CIT(A)'s order in preceding assessment year on the very issue. The assessee files before us copy of a co-ordinate bench order in this regard dated 29.01.2015 rejecting Revenue's identical substantive ground as under: 2. Assessee trust is a Charitable Trust registered with Incometax Department. Assessing Officer rejected the claim of deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have to be arrived at in the normal commercial manner without classification under the various heads set out in section 14. It held that the expression income has to be understood in the popular or general sense and not in the sense in which the income is arrived at for the purpose of assessment to tax by application of some artificial provisions either giving or denying deduction. It observed that the computation under the different categories or heads arises only for the purposes of ascertaining the total income for the purposes of charge. Those provisions cannot be introduced to find out what the income derived from the property held under trust to be excluded from the total income is, for the purpose of the exemptions under Chapter III. We are in respectful agreement with the view taken by the Karnataka, Madhya Pradesh and Madras High Courts. We, therefore, answer both the questions referred to us in the affirmative and against the Revenue. No order as to costs. Following the same Hon'ble Gujarat High Court in Ahmedabad South Indian Association Charitable Trust (supra) has decided the issue in favour of assessee. Thus, the issue before us i.e. allowabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its and gains of business and section 29 provides that income from profits and gains of business ahll be computed in accordance with section 30 to section 43C. That, section 32(1) of the Act provides for depreciation in respect of building, plant and machinery owned by the assessee and used for business purposes. It further provides for deduction subject to section 34. In that matter also, a similar argument, as in the present case, was advanced on behalf of the revenue, namely, that depreciation can be allowed as deduction only under section 32 of the Income Tax Act and not under general principles. The Court rejected this argument. It was held that normal depreciation can be considered as a legitimate deduction in computing the real income of the assessee on general principles or under section 11(1)(a) of the Income Tax Act The Court rejected the argument on behalf of the revenue that section 32 of the Income Tax Act was the only section granting benefit of deduction on account of depreciation. It was held that income of a Charitable Trust derived form building, plant and machinery and furniture was liable to be computed in normal commercial manner although the Trust may not be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve taken the aforesaid view with only exception thereto by the High Court of Kerala which has taken a contrary view in Lissie Medical Institutions v. Commissioner of Income Tax . It may also be mentioned at this stage that the legislature, realising that there was no specific provision in this behalf in the Income Tax Act, has made amendment in Section 11(6) of the Act vide Finance Act No. 2/2014 which became effective from the Assessment Year 2015-2016. The Delhi High Court has taken the view and rightly so, that the said amendment is prospective in nature. It also follows that once assessee is allowed depreciation, he shall be entitled to carry forward the depreciation as well. For the aforesaid reasons, we affirm the view taken by the High Courts in these cases and dismiss these matters. 9. Respectfully following the aforesaid orders of co-ordinate bench, Hon ble Gujarat High Court, Hon ble Supreme Court and apart from the above said. In our considered opinion ld.CIT(A) has passed reasoned and detailed order and now mater is squarely covered by the judgment of Hon ble Apex Court. Therefore, in these circumstances, we are not incline to interfere in the order p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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